The Apprenticeship Levy: what does it mean for businesses?

The job market is constantly evolving and 2017 has seen a lot of change. With the continuing ‘war for talent’ reaching numerous industries across the UK, April saw the introduction of the Apprenticeship Levy. But what is this Levy and what does it mean?

Well, for those who are interested in an apprenticeship it’s great news. But equally, for businesses the Levy presents an enormous opportunity. The ultimate goal of the Apprenticeship Levy is to help close the current skills gap in the market by encouraging businesses to take on and invest in apprentices. This will affect businesses with a pay bill over £3m each year and the levy will act as a new tax to be used to fund training for their apprentices. The Levy payable is 0.5% of the employers pay bill, of which the government will top-up by 10%, so for every £1 paid an employer will have £1.10 to spend on apprenticeships.

John Gomersall, Senior Consultant, Michael Page Human Resources, spoke to Simon Gott, Head of Learning and Development (L&D) at Portakabin Group, about his view on how the Levy and its wider talent implications.

“I have had many conversations with fellow professionals at various networking events and such over the past year or so and I have to say, I have noticed a tangible sense of trepidation and uncertainty. If I speak to some of my colleagues in the finance arena I’ll often hear the groans and grumbles about “yet another tax to pay”. I find myself trying to convince them that the Levy is a positive move from the government and will help to improve skills across UK industries and, in turn, begin to close the overall productivity gap between ourselves and many of our European counterparts.”

“For me, it's not just my stereotypical 'soft and fluffy’ L&D voice. I genuinely believe the introduction of the Levy and the wider reforms to the Apprentice system represent a significant opportunity for all of us to up our game. This is the message I have been sharing with my colleagues at Portakabin. The Levy provides us with a protected budget to plug our identified gaps in knowledge, skills and experiential learning. It is a vehicle to drive us towards our strategic objectives and allows us to carry out a wholesale organisational learning audit and plan for the next few years ahead. In my previous 15 years in the field, I spent lots of time wrestling with internal politics in order to gain agreement to invest in organisational and personal learning and development – this is a great time for L&D professionals because the Levy provides us with a platform from which to build.”

Simon, how will you ensure Portakabin make the most of the Levy?

“We are making some adjustments to the way in which we organise our strategies for learning at Portakabin. For example, we are needing to pay much more attention to our ‘on the job’ learning. This is because the reforms place much more accountability with the employer to ensure learning that is acquired through external providers is embedded internally. This means some extra work to design robust internal programmes of learning but it is worth the effort because it gives us more rounded and practised employees.”

“I know there is still a fair amount of confusion surrounding the Levy and the new system, and in particular, how End Point Assessment (EPA) will be implemented. My advice to anybody struggling with this is – don’t avoid dealing with it. Make sure somebody in your organisation is responsible and willing to step forward to manage and organise EPA. Don’t be afraid to ask questions, the Skills Funding Agency (SFA) are always on hand and willing to answer your questions. I have been in contact with them on numerous occasions and always found them to be approachable and most helpful. So don’t hang around, act now. If you don’t use your Levy fund you will lose it after 24 months. It’s not as complicated as some would lead you to believe – it’s a huge opportunity for HR & L&D to get alongside their colleagues at the top table and influence the way forward to organisational success”

The Apprenticeship Levy should be viewed as an investment and not as ‘another tax’. It will be beneficial for both business and the industries they operate in by ensuring a pipeline of talent in the UK.

If you are looking for talent to join your team as an apprentice or an intern, then create a company profile to advertise your opportunities for free.